Analysis of the third kind
22 November 2017 05:57 (South Africa)

British Airways and Iberia merge, but few celebrate

On Friday, British Airways and Iberia announced a long-time-in-the-making merger. Still subject to regulators’ approval, this deal will be, years from now, used in many a B-school as a case study of a perfect defensive merger. There are no aggressive future plans on wresting the market share from nearest rivals, deep cost-cutting is not on the books (only 2.7%, actually) and the two airlines’ corporate cultures, salary bills as well as pension fund obligations couldn’t be further apart. But as they are now, both companies are struggling (BA just posted its biggest loss in history and imposed cost-cutting measures that left unions fuming) and are being viciously attacked by the low-cost carriers, like RyanAir and EasyJet, which serve only the hand-picked, easily profitable routes. The new company will be 55% owned by BA. Read more: BusinessWeek

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